One of the challenges of the updated Strategic Energy Technology Plan (SET-Plan) is to align sources of finance with the research and innovation priorities that underpin energy transition, Gerassimos Thomas, Deputy Director General at the European Commission’s Directorate General for Energy, said at the SET-Plan Conference in Brussels on September 22.
At a session on financing challenges and possibilities and synergies between financing instruments, Mr. Thomas said that the 40% greenhouse gas reduction target set by the European Commission required investment of about EUR 200 billion per year, of which public money could supply only a small percentage. The lion’s share of this investment will have to come from financial institutions and private sector investors. Consequently finance is seen as both an enabler and a challenge for energy transition, he said.
Thomas said that there are good examples of synergies between Horizon 2020 and structural funds and projects have successfully exploited these synergies. However, he said that this had not happened often enough and, as a result, the updated SET-Plan focuses on aligning priorities and attracting financial resources to the right synergies.
Carlos Pimenta, President of the Supervisory Board of SIVAR NovEnergia Holding Company, said at the conference that, for the required level of investment to materialize, there would need to be clear rules on the market with no place for retroactive regulatory changes. He also said that there is a need for a single, meaningful, regulated, EU-wide market on CO2 certificates, rather than fragmented national markets.
Nicholas Jennet, Director of the European Investment Bank’s New Products and Special Transactions Department said that there is an unprecedented level of investment need in the energy sector and that this need, paradoxically, coexists with unprecedented levels of liquidity on the world financial markets. The reason for this is that, although the liquidity is there, there is no appetite for risk.
He said that to counteract this the EIB had put in place a number of innovative financial instruments that are specifically designed to increase the bank’s ability to take risk, including the InnovFin financial instrument and the European Fund for Strategic Investments (EFSI), the latter being the largest and most ambitious financial instrument to encourage risk-taking put in place by the EIB and the European Commission.
The ESFI has created some EUR 21 billion in risk-taking capacity, the core of which is a EUR 16 billion guarantee made available to the EIB by the EC, enabling the EIB to significantly increase its risky lending, Jennet said. The bank calculates that this guarantee will allow it to increase its investment-grade and even equity-risk lending by a total of almost EUR 50 billion.
Jennet said that this, in turn, would catalyze some EUR 240 billion in investment through the Infrastructure and Innovation Window, adding that this is matched by a scheme in the European Investment Fund that will catalyze EUR 75 billion in investment for small and medium sized enterprises. These actions complement the efforts already been undertaken by the EIB and the European Commission as part of InnovFin – the programme for financial instruments under Horizon 2020, he said.
For more information:
http://www.setplan2015.lu/en/welcome-to-the-2015-set-plan-conference